The SMS year in review

This was the year when the SMS interconnect fee issue finally came to a head,
with Cell C forcing the issue by breaking the existing gentlemen’s agreement
between the network operators. It also saw the opt-in/opt-out debate being
settled with the forthcoming passing of the Protection of Personal Information
Bill (POPI) happily key clauses were not as watered down as initially feared.
And in a major step forward, Vodacom’s double opt-in capabilities have had a
dramatic impact on reducing the number of complaints about subscription service
sign ups.

SMS internetworking fees

The issue of no SMS interconnect fees being in place the basis of a gentlemen’s
agreement between the major mobile operators not to compete when it comes to
terminating application-to-person (A2P) SMS messaging traffic first bubbled up
at the end of last year when new entrants, including Neotel and Telfree, took
advantage of no fees for inter-network SMS connections and simply terminated
A2P traffic over the incumbents’ networks. This was soon put to an end but then
the apple cart was well and truly upset when Cell C a far more formidable
opponent started allowing a single WASP to terminate messages on other networks
this year.

This could have a major impact on the revenue of Vodacom and MTN because they
are in effect terminating Cell C’s traffic for free. It will be interesting to
see how long this state of affairs continues. Will Vodacom and MTN force Cell C
to stop this practice, or will the Independent Communications Authority of
South Africa (ICASA) step in and enforce SMS interconnect fees? The legislation
is in place to do so but it needs to be enforced.

Key to how this plays out depends on Vodacom realising that although it stands
to lose a bit of money if interconnect fees are introduced, at the end of the
day, as the largest operator, it is actually in the pound seat as the most
traffic will terminate on its network. Cell C, on the other hand, has the most
to lose as a smaller network.

In my view, the bulk pricing of SMS messages for WASPs or emergent operators
should be the same, and regulated by ICASA and governed by the Electronic
Communications Act, allowing healthy competition and a level playing field for
all.

Opt-in electronic marketing

Despite my initial concerns, POPI was not watered down as drastically as it
looked like it might be earlier this year, despite lobbying by the Direct
Marketing Association of South Africa (DMASA). The law will work on the basis
that customers must opt into marketing messages when they first supply their
cellphone number to a company and from then on be given the chance to opt out.

Significantly, although companies are allowed a single opportunity to request
consent from non-customers, the rules around how this is done are strict. No
marketing messages may be included in this request for consented to
communication, and companies won’t be able to simply change their names and try
again under a different brand. Finally, the legal definition of consent was not
watered down consent for marketing communications needs to be both explicit and
informed. In this regard, the Wireless Application Service Providers’
Association (WASPA) code of conduct is already compliant with POPI.

When it comes to the Consumer Protection Act (CPA) Regulations, however, there
has been no movement on the creation of a “do not contact” registry. Indeed,
budget has yet to be allocated for it. While the DMASA wants its existing do
not contact list to be used, in my opinion the unnecessary information the
DMASA requests dissuades people from actually using it. I would suggest that
all you need to verify that a person is who they say they are is their
cellphone number.

Spam

It is now difficult for spammers to bypass the local networks and WASPA’s
jurisdiction by using international routes, which means that in excess of 90%
of South African A2P traffic can be traced back along identifiable routes. This
allows WASPA to more effectively track down spammers, fine them, and in
worst-case scenarios, expel them all together from the industry body and so
expel them from operating in the South African market completely. The increase
in adjudications and repeat offenders can be seen on the WASPA site. It is
still important however that consumers escalate spam complaints via official
channels to allow WASPA to investigate effectively and prevent other consumers
from being spammed.

Double opt in

WASPA has seen Vodacom related unsubscribe requests drop from 70,000 to 20,000
over the course of the year thanks to Vodacom introducing a double opt-in
mechanism for mobile subscription services. While previously customers would be
able to sign up for a subscription service at the click of a button, now
Vodacom confirms the subscription adding in traceability in the case of fraud,
and ensuring the customer is completely aware that they are signing up for an
on-going service. This prevents consumers accidentally signing-up for a service.

So while the jury is out on a number of issues that affect the SMS industry, on
the whole, industry players have taken some major steps forward in protecting
consumer rights and maintaining the integrity, and so the value, of mobile as a
medium for business communications and transactions.